Need Cash for Inheritance? Discover the Truth about Inheritance Laws in your State.
In the United States, inheritance laws are governed by the Uniform Probate Code. In place since 1969, UPC is a statute that outlines what happens to the assets, debts, and financial affairs of a deceased person. Currently 18 states have adopted the Uniform Probate Code in its entirety, while the remaining 32 states have adopted parts of it.
Although inheritance laws are different in each state, the majority require a similar process. First, an estate executor needs to be appointed. Oftentimes the executor is appointed through the deceased person's will. If there is no will, or the appointed executor does not want to take on the responsibility, an Administrator will be appointed through probate court.
Both Executors and Administrators are required to settle the deceased's debts, pay taxes and funeral expenses, and distribute the remaining assets according to inheritance laws dictated by the state where the deceased resided.
If the deceased has left a will or living trust, it must go through probate to ensure it is valid. The probate process requires individuals listed as beneficiaries to be notified and all assets verified. If there are debts associated with the estate, they must be settled prior to beneficiary disbursements.
If there is no will or living trust, the inheritence law states the estate must go through probate to ensure creditors are paid. This process is different for each state; however disbursements typically go to the surviving spouse, children or family members.
Unless the inheritance is over $2 million, beneficiaries will not have to pay inheritance tax. If the estate is valued at more than $2 million, taxes will be charged on any amount over the exemption threshold. Irregardless of whether taxes are owed or not, beneficiaries are required to file an inheritance tax return which details the assets.
In order to retain control over how your assets are distributed upon your death, it's crucial to develop an estate plan. While no two estate plans are identical, there are certain legal documents that can expedite the process and eliminate stress from beneficiaries.
First, make a will. Most attorneys offer this service for a nominal fee. Additionally, legal forms can be downloaded for free via the Internet. In order for a will to be legally binding, it must be witnessed by two adults and notarized by a Notary Public.
In addition to executing a will, consider setting up a revocable living trust. Property transferred into a living trust doesn't go through probate. A living trust is executed by a Successor Trustee and assets are transferred to named beneficiaries upon your death. Typically, a revocable living trust requires no attorney or court costs and assets can be transferred within a matter of weeks.
Another way to avoid probate is to name a beneficiary for bank accounts and retirement plans. Transfer-on-Death benefits can be arranged for stocks, bond, vehicles, and property. When a beneficiary is assigned, it allows the funds to skip the probate process.
Many people postpone writing a will because they consider it an inconvenience. However, if you do not designate who you want your assets transferred to, the state will step in and do it for you. Making arrangements for distribution of your assets prior to your death is the only way to ensure that your loved ones will receive what you want them to have.
While it may be difficult to think about dying, you owe it to yourself and your loved ones to develop an estate plan. Doing so will provide you with peace of mind and prevent loved ones from unnecessary stress in the future.
Published on August 27, 2007 at 09:28 PM